Variable annuities come with a free-look period, which is generally a minimum of 10 business days. If the consumer decides he or she doesn’t want to keep the product, he or she can cancel without losing any premiums or surrender charges to the company. For fixed annuities, consumers have the same free look period their state requires of insurance p

When a financial planner estimates the educational funding needs for a client, she uses the following five inputs: Current tuition cost per year Education inflation rate Number of years of college attendance Number of years before college begins Expected investment return Because tuition has historically risen even faster than the general rate of i

it is so unclear that the SEC is frequently responding to letters from attorneys of various clients trying to figure out if it’s okay to do what they’re proposing to do without actually registering as an investment adviser. In case the exam asks, those requests are called “requests for no-action relief.”

These tuition credits cover tuition and fees only. If the child gets a scholarship or doesn’t need the money because of something tragic like death or disability, a refund is typically provided plus a modest rate of interest. The exam could refer to prepaid tuition plans as “defined benefit plans.” You pay for the tuition credits now, and then you

Every time you pay tax on a dividend or interest payment that you reinvest, you add to your cost basis by the amount that you reinvest. That’s what “cost basis” means—the money within an investment holding that you’ve already paid tax on. The amount above that is subject to capital gains taxes, but not until you take the gain.

your exam may ask you to say that before issuing a “stop” order (deny, suspend, revoke), the Administrator will provide the three bullet points above.

Remember that alpha takes the volatility or price risk of an investment and compares its risk-adjusted performance to the benchmark that the investment most closely matches. Beta measures systematic risk, showing how much a security or portfolio moves compared to the overall market.

The exam might say that the dividend is "tied to prevailing interest rates," because it likes to phrase things in many different ways to see if you learned—or merely tried to memorize your way through—the material.

Most soft-dollar compensation is allowable, though it must be disclosed to clients. On the other hand, the regulators won’t let investment advisers receive the following soft-dollar compensation arrangements at all, even with disclosure: furniture and office equipment, salaries or overhead, vacations, cell phones, etc. In other words, the only form